McCain, Obama Offer New Economic Plans Aimed at Main Street Voters

In the wake of the final presidential debate last night at Hofstra University on Long Island, N.Y., both candidates have developed and presented economic plans aimed at addressing key concerns for many Main Street voters and calming their fears over the financial crisis. Democrat Barack Obama and Republican John McCain both made distressed mortgages part of their rescue packages, but with different twists. One of Obama’s new proposals calls for a 90-day moratorium on foreclosures for homeowners that are acting in “good faith” to pay their mortgages. Banks and financial institutions that have benefited from the federal $700 billion rescue plan should be required to offer the foreclosure freeze to mortgage holders under his plan. McCain’s proposal is to take $300 billion of the $700 billion Treasury bailout and use it to buy distressed mortgages from struggling homeowners and mortgage providers and replace them with 30-year, fixed mortgages that are government-backed and based on the new values of the homes. On Tuesday, during a campaign stop in Pennsylvania, McCain expanded on the mortgage proposal and offered up a $52.5 billion economic plan that would eliminate taxes on unemployment benefits, lower taxes on seniors withdrawing from their retirement accounts, waives rules that force seniors to tax-preferred IRA accounts and 401Ks to sell stocks now, lower the tax rate on IRA and 401K plans to the lowest rate, 10 percent, on the first 50,000 withdrawn and cut capital gains taxes. McCain also promised to order the Treasury Department to protect all savings for six months. He said cutting the tax rate on capital gains in half for 2009 and 2010 would “promote buying, raise asset values, help companies and shore up the pension plans for workers and retirees,” according to an Associated Press report. In an estimated $60 billion economic plan, Obama also called for temporarily eliminating taxes on unemployment benefits and lowering the tax rate on IRA and 401K plan withdrawals. Speaking on the economy Monday, Obama asked the Federal Reserve and Treasury to establish a facility to lend to state and local governments, similar to the actions taken last week to get liquidity back into the commercial paper market. Obama also called for a temporary tax break for businesses creating new jobs over the next two years and for keeping all options open to help out the struggling U.S. auto industry. The Democrat said the middle class needed an economic rescue plan now. On Tuesday, Obama spokesman Bill Burton called McCain’s latest proposals “a day late and 101 million middle-class families short.” He added that it “does nothing to cut taxes for small businesses or give them access to credit.” Meanwhile, Rob Portman, a McCain advisor and former budget director for President Bush, said Obama’s proposals “were a lot of new promises for new spending adding to the $860 billion in additional spending that he’s already promised during the campaign, and that is not the way we are going to get ourselves back on track. More spending, in fact, is going to make the situation worse.” McCain, who is trailing Obama in recent polling, is hoping his economic proposals provide the “game changer” that is needed to propel him to victory in November, while Obama keeps aiming his proposals at the middle class in hopes those voters will come out for him.